SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Rule 14a-12
PETER KIEWIT SONS', INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
- -----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11*:
- -----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------
5) Total fee paid: ---------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid: -------------------------------------
2) Form, Schedule or Registration Statement No.: ---------------
3) Filing party: -----------------------------------------------
4) Date filed: -------------------------------------------------
- ------------------------
*Set forth the amount on which the filing fee is calculated and
state how it was determined.
[PKS LETTERHEAD]
April 23, 1999
Dear PKS Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Peter Kiewit Sons', Inc. (the "Corporation")
to be held at 9:00 a.m. on Saturday, June 19, 1999, at Kiewit
Plaza, Omaha, Nebraska 68131.
Information concerning the matters to be considered and
voted upon at the Annual Meeting is set forth in the attached
Notice of Annual Meeting and Proxy Statement. The Corporation's
1998 Annual Report on Form 10-K is also enclosed for your review
and information.
It is important that your shares be represented at the
Annual Meeting, regardless of the number of shares that you
hold. Therefore, whether or not you plan to attend the Annual
Meeting, as soon as possible, please sign, date and return your
Proxy in the envelope that has been provided. The execution and
delivery of a Proxy will not prevent you from voting your shares
in person if you subsequently choose to attend the Annual
Meeting.
Sincerely,
/s/ Kenneth E. Stinson
Kenneth E. Stinson
Chairman of the Board
PETER KIEWIT SONS', INC.
Kiewit Plaza
Omaha, Nebraska 68131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Saturday, June 19, 1999
To the Stockholders of Peter Kiewit Sons', Inc.:
The Annual Meeting of Stockholders ("Annual Meeting") of
Peter Kiewit Sons', Inc., a Delaware corporation (the
"Corporation"), will be held at Kiewit Plaza, Omaha, Nebraska
68131 at 9:00 a.m. on Saturday, June 19, 1999 for the following
purposes:
1. To approve the Corporation's 1999 Bonus Plan (the
"Bonus Plan Proposal");
2. To approve an amendment to the Corporation's Restated
Certificate of Incorporation ("Certificate") to change the
definition of "current inside director" by reducing the
required years of employment from 8 years to 6 years (the
"Qualification Amendment");
3. To approve an amendment to the Certificate to permit the
sale of the Corporation's $.01 par value common stock ("Common
Stock") to non-employee directors (the "Stock Ownership
Amendment");
4. To approve an amendment to the Certificate to eliminate
the Corporation's Common Stock, Non-Redeemable Series (the
"Non-Redeemable Series Amendment");
5. To elect thirteen (13) directors to hold office as
specified in the attached Proxy Statement; and
6. To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on
April 22, 1999 (the "Record Date") as the record date for the
determination of the holders of Common Stock entitled to notice
of, and to vote at, the Annual Meeting. Accordingly, only
holders of record of Common Stock at the close of business on
the Record Date will be entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof. No
business other than the Bonus Plan Proposal, the Qualification
Amendment, the Stock Ownership Amendment, the Non-Redeemable
Series Amendment and the election of directors is expected to be
considered at the Annual Meeting or at any adjournment or
postponement thereof. This Notice, the Proxy Statement and the
accompanying form of Proxy are first being mailed to
Stockholders on or about April 23, 1999.
The matters to be considered at the Annual Meeting are more
fully described in the accompanying Proxy Statement.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL
MEETING. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
HOWEVER, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PREPAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING
THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THAT STOCKHOLDER
HAS RETURNED A PROXY.
By Order of the Board of Directors
Kenneth E. Stinson
Chairman of the Board
April 23, 1999
PETER KIEWIT SONS', INC.
Kiewit Plaza
Omaha, Nebraska 68131
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held Saturday, June 19, 1999
THE MEETING; VOTING AND SOLICITATION
Date, Time and Place of the Annual Meeting
The annual meeting ("Annual Meeting") of the holders (the
"Stockholders") of the $0.01 par value common stock ("Common
Stock") of Peter Kiewit Sons', Inc., a Delaware corporation
(the "Corporation"), will be held on Saturday, June 19, 1999,
at 9:00 a.m. local time, at Kiewit Plaza, Omaha, Nebraska 68131.
Purpose of the Annual Meeting
This Proxy Statement ("Proxy Statement") is being
furnished to Stockholders in connection with the solicitation of
proxies on behalf of the Board of Directors of the Corporation
(the "Board") to be voted at the Annual Meeting, or any
adjournment or postponement thereof, for the purpose of
considering the following matters: (a) the approval of the
Corporation's 1999 Bonus Plan (the "Bonus Plan Proposal"); (b)
the approval of an amendment to the Corporation's Restated
Certificate of Incorporation ("Certificate") to change the
definition of "current inside director" by reducing the
required years of employment from 8 years to 6 years (the
"Qualification Amendment"); (c) the approval of an amendment
to the Certificate to permit the sale of Common Stock to non-
employee directors (the "Stock Ownership Amendment"); (d) the
approval of an amendment to the Certificate to eliminate the
Corporation's Common Stock, Non-Redeemable Series (the "Non-
Redeemable Series Amendment"); (e) to elect thirteen (13)
directors to hold office as specified in the attached Proxy
Statement; and (f) to transact such other business as may
properly come before the Annual Meeting.
Date of Provision of Proxy Statement
This Proxy Statement, the Notice of Annual Meeting and the
accompanying Proxy are first being mailed to Stockholders on or
about April 23, 1999.
Annual Meeting Record Date
As of April 22, 1999, the record date for the determination
of persons entitled to vote at the Annual Meeting (the "Record
Date"), there were 33,490,776 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote
on each matter to be voted upon by the Stockholders at the
Annual Meeting.
Appraisal Rights
Stockholders will not be entitled to appraisal rights as a
result of the matters proposed to be considered at the Annual
Meeting.
Voting
The Certificate provides the Stockholders with the option of
cumulative voting in any election of directors. A proxy form
which provides for cumulative voting will be provided promptly
to any Stockholder upon request, by writing the Stock Registrar
at Kiewit Plaza, Omaha, Nebraska 68131, or by calling him at
(402) 342-2052. Under the cumulative voting method, the number of
a Stockholder's shares of Common Stock is first multiplied by the
number of directors to be elected. The resulting number of votes
may then be voted for a single nominee or distributed among some
or all of the nominees. After the voting is closed, the nominees
are ranked in order by the number of votes received. The highest
ranking nominees are then elected until the number of open
directorships is filled.
The approval of a plurality of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled
to vote is required to elect the nominees as directors, unless
cumulative voting is required. The approval of the Bonus Plan
Proposal requires the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote thereon. The
approval of the Qualification Amendment requires the affirmative
vote of the holders of at least 66 2/3% of the issued and
outstanding shares of Common Stock. The approval of the Stock
Ownership Amendment and the Non-Redeemable Series Amendment each
requires the affirmative vote of the holders of at least 80% of
the issued and outstanding shares of Common Stock.
Stockholders can vote on matters presented at the Annual
Meeting by either voting in person or by signing, dating and
returning the enclosed proxy. In the election of directors, the
enclosed proxy may be marked for the election of all, some or
none of the nominees for director. With respect to the Bonus
Plan Proposal, the Qualification Amendment, the Stock Ownership
Amendment and the Non-Redeemable Series Amendment, the enclosed
proxy may be marked for or against any such proposals, or the
Stockholder may abstain from voting on any of such proposals.
As of the Record Date, there were 33,490,776 shares of
Common Stock outstanding and entitled to vote at the Annual
Meeting. The presence, in person or by proxy, of the holders of
a majority of the issued and outstanding shares of Common Stock
entitled to vote as of the Record Date is required to constitute
a quorum at the Annual Meeting. Under applicable Delaware law,
abstentions and "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled
to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) will be
treated as present for purposes of determining the presence of a
quorum at the Annual Meeting. Abstentions and "non-votes" will
have the effect of votes against the Bonus Plan Proposal, the
Qualification Amendment, the Stock Ownership Amendment and the
Non-Redeemable Series Amendment. If a quorum should not be
present, the Annual Meeting may be adjourned from time to time
until the necessary quorum is obtained.
Proxies
All shares of Common Stock represented by properly executed
proxies, which are returned and not revoked, will be voted in
accordance with the instructions, if any, given therein. If no
instructions are provided in a proxy, it will be voted FOR
approval of the Bonus Plan Proposal, FOR approval of the
Qualification Amendment, FOR approval of the Stock Ownership
Amendment, FOR approval of the Non-Redeemable Series Amendment,
FOR the Board's nominees for director, and in accordance with
the proxy-holders' best judgment as to any other business raised
at the Annual Meeting.
Any Stockholder who delivers a proxy may revoke it at any
time before it is voted by delivering to the Secretary of the
Corporation a written statement revoking the proxy, by executing
and delivering a later dated proxy or by voting in person at the
Annual Meeting.
Solicitation Costs
The Corporation will bear its own cost of solicitation of
proxies. In addition to the use of the mails, proxies may be
solicited by certain directors, officers and other employees of
the Corporation, not specially employed for the purpose, by
personal interview, telephone, telegram or e-mail. Such
directors, officers and employees will not receive additional
compensation for such solicitation but may be reimbursed for
out-of-pocket expenses incurred in connection therewith.
EXPLANATORY NOTE
On March 31, 1998, the Corporation's former parent, Level 3
Communications, Inc. ("Level 3") transferred all of the issued
and outstanding shares of common stock of Kiewit Construction
Group Inc. ("KCG"), as well as certain other assets and
liabilities related to Level 3's construction and mining
business, which together with such common stock comprised all of
the construction and mining business of Level 3 (the
"Construction Business"), to the Corporation in exchange for
all of the Corporation's then outstanding shares of Common
Stock. Level 3 then distributed all of such Common Stock to the
holders of Level 3's Class C Construction & Mining Group
Restricted Redeemable Convertible Exchangeable Common Stock
("Class C Stock"), in exchange for such shares of Class C
Stock. As a result of such transactions (collectively, the
"Transaction"), the Corporation is now owned by the former
holders of Level 3's Class C Stock, and now conducts the
Construction Business. In connection with the Transaction, the
Corporation's name was changed from "PKS Holdings, Inc." to
"Peter Kiewit Sons', Inc." and Level 3's name was changed from
"Peter Kiewit Sons', Inc." to "Level 3 Communications, Inc."
DIRECTOR NOMINEES
The Board has determined that thirteen (13) directors are to
be elected to the Board at the Annual Meeting. All the nominees
are current directors of the Corporation, except Mr. Cline. Mr.
Bay was appointed by the Board on March 4, 1999 to fill the
vacancy created by the resignation of Thomas C. Stortz in
December 1998 due to a change in Mr. Stortz' occupation. Each
nominee has agreed to serve as a director, if elected. Directors
will be elected to serve until the next annual election and until
their successors are duly elected and qualified. If any nominee
shall, prior to the Annual Meeting, become unavailable for
election as a director, the persons named in the proxy will vote
for that nominee, if any, in their discretion as may be
recommended by the Board, or the Board may reduce the number of
directors to eliminate the vacancy. The term of Mr. Cline's
directorship will not commence until approval of the
Qualification Amendment and filing thereof with the Delaware
Secretary of State. In the event the Qualification Amendment is
not approved, Mr. Cline will not be eligible to serve as a
director, and only twelve (12) directors will be elected to the
Board. Information as to each nominee for director is set forth
below.
Name Business Experience Age
- ---- ------------------- ---
Mogens C. Bay Mr. Bay has been a director of the 50
Corporation since March 1999. Mr. Bay
has been Chairman of Valmont Industries,
Inc. ("Valmont") since January 1997 and
President and Chief Executive Officer of
Valmont since August 1993. Mr. Bay is also
currently a director of Valmont, ConAgra,
Inc. and InaCom Corp. Mr. Bay is a member
of the Compensation Committee and the
Executive Compensation Subcommittee of
the Compensation Committee of the
Corporation.
Roy L. Cline Mr. Cline has been the President of 61
Kiewit Industrial Co., a subsidiary of
the Corporation, since March 1992.
Richard W. Colf Mr. Colf has been a director of the 55
Corporation since August 1997. Mr. Colf
has been an Executive Vice President of
the Corporation since July 1998. Mr. Colf
has been an Executive Vice President of
Kiewit Pacific Co. ("KPC"), a subsidiary
of the Corporation, since September 1998,
was a Senior Vice President of KPC from
October 1995 to September 1998 and was a
Vice President of KPC for more than five
years prior to October 1995. Mr. Colf is a
member of the Executive Committee of the
Corporation.
James Q. Crowe Mr. Crowe has been a director of the 49
Corporation since August 1997. Mr. Crowe
has been the President and Chief Executive
Officer of Level 3 since August 1997. Mr.
Crowe was Chairman of the Board of MFS
Communications Company, Inc. ("MFS") for
more than five years prior to December 1997,
Chief Executive Officer from November 1991
until December 1997 and was President from
January 1988 to June 1989 and from April
1990 until January 1992. Mr. Crowe was
Chairman of the Board of MCI WorldCom, Inc.
from January 1997 until July 1997. Mr. Crowe
is currently also a director of Commonwealth
Telephone Enterprises, Inc., RCN
Corporation, InaCom Corp. and Level 3. Mr.
Crowe is a member of the Compensation
Committee of the Corporation.
Richard Geary Mr. Geary has been a director of the 64
Corporation since August 1997. Mr. Geary
was an Executive Vice President of the
Corporation from August 1997 to July 1998.
Mr. Geary was an Executive Vice President
of KCG and President of KPC for more than
five years prior to August 1997. Mr. Geary
is currently also an advisory director of
Portland General Corp.
Bruce E. Grewcock Mr. Grewcock has been a director and 45
Executive Vice President of the
Corporation since August 1997. Mr. Grewcock
has been the President of Kiewit Western
Co., a subsidiary of the Corporation, since
July 1997. Mr. Grewcock was an Executive
Vice President of KCG from July 1996 to June
1998, and President of Kiewit Mining Group,
Inc., a subsidiary of the Corporation, from
January 1992 to July 1996. Mr. Grewcock is
currently also a director of Kinross Gold
Corporation. Mr. Grewcock is a member of
the Executive Committee of the Corporation.
William L. Grewcock Mr. Grewcock has been a director of the 73
Corporation since August 1997. Mr.
Grewcock was Vice Chairman of Level 3 for
more than five years prior to April 1998.
Mr. Grewcock is also a director of Level
3. Mr. Grewcock is a member of the
Compensation Committee of the Corporation.
Tait P. Johnson Mr. Johnson has been a director of the 49
Corporation since August 1997. Mr.
Johnson has been the President of Gilbert
Industrial Corporation, a subsidiary of
the Corporation, for more than the last
five years, and was President of Gilbert
Southern Corp., a subsidiary of the
Corporation, from October 1995 to July
1996 and Vice President of Gilbert
Southern Corp. from June 1994 to October
1995. Mr. Johnson is the Chairman of the
Audit Committee of the Corporation.
Peter Kiewit, Jr. Mr. Kiewit has been a director of the 72
Corporation since August 1997. Mr.
Kiewit has been Of Counsel to the law
firm of Gallagher & Kennedy, Phoenix,
Arizona, for more than the last five years.
Mr. Kiewit is a member of the Audit
Committee, the Compensation Committee
and the Executive Compensation Subcommittee
of the Compensation Committee of the
Corporation.
Allan K. Kirkwood Mr. Kirkwood has been a director of the 55
Corporation since August 1997. Mr.
Kirkwood has been an Executive Vice
President of the Corporation since July
1998. Mr. Kirkwood has been an Executive
Vice President of KPC since September 1998,
was a Senior Vice President of KPC from
October 1995 to September 1998 and was a
Vice President of KPC for more than five
years prior to October 1995. Mr. Kirkwood
is a member of the Executive Committee and
the Audit Committee of the Corporation.
Walter Scott, Jr. Mr. Scott has been a director and 67
Chairman Emeritus of the Corporation
since August 1997. Mr. Scott has been
the Chairman of the Board of Level 3 for
more than the last five years. Mr. Scott
was the Chief Executive Officer of Level
3 for more than five years prior to August
1997. Mr. Scott is also currently a director
of Berkshire Hathaway Inc., Burlington
Resources Inc., MidAmerican Energy Holding
Co., ConAgra, Inc., Commonwealth Telephone
Enterprises, Inc., RCN Corporation, U.S.
Bancorp, Valmont and Level 3. Mr. Scott is
the Chairman of the Compensation Committee
of the Corporation.
Kenneth E. Stinson Mr. Stinson has been President and a 56
director of the Corporation since August
1997 and Chairman and Chief Executive
Officer of the Corporation since March
1998. Mr. Stinson has been the Chairman
and Chief Executive Officer of KCG for
more than the last five years. Mr. Stinson
was Executive Vice President of Level 3
from June 1991 to August 1997. Mr. Stinson
is also currently a director of ConAgra,
Inc., Valmont and Level 3. Mr. Stinson is
the Chairman of the Executive Committee of
the Corporation.
George B. Toll, Jr. Mr. Toll has been a director and 62
Executive Vice President of the
Corporation since August 1997. Mr. Toll
was an Executive Vice President of KCG
from April 1994 to June 1998, and a Vice
President of KPC from June 1992 to August
1994. Mr. Toll is a member of the Executive
Committee of the Corporation.
The Board unanimously recommends a vote FOR
the nominees identified above.
INFORMATION ABOUT THE BOARD OF DIRECTORS
Committees
The Board has an Audit Committee, a Compensation Committee
and an Executive Committee.
The Audit Committee recommends the selection of and reviews
the services provided by the Corporation's independent auditors,
consults with the independent auditors and reviews the need for
internal auditing procedures and the adequacy of internal
controls and reports and makes recommendations to the full
Board. The current Audit Committee members are Messrs. Johnson
(Chairman), Kirkwood and Kiewit. The audit committee had three
formal meetings in 1998.
The Compensation Committee determines the compensation of
the Chief Executive Officer and reviews the compensation,
securities ownership, and benefits of the Corporation's
executive officers. The current Compensation Committee members
are Messrs. Scott (Chairman), Bay, Crowe, Kiewit and William
Grewcock. The Compensation Committee had two formal meetings
in 1998.
The Compensation Committee has an Executive Compensation
Subcommittee. The Executive Compensation Subcommittee reviews
and approves or disapproves, all compensation of whatever nature
to be paid to the Chief Executive Officer of the Corporation and
the Corporation's next four highest paid executive officers (the
"Named Executive Officers"); establishes and administers
performance goals pursuant to the Corporation's executive bonus
plans, if any, adopted pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"); and approves or
disapproves, on behalf of the Board, the creation of any new bonus
plans for the executive officers of the Corporation pursuant to
Section 162(m) of the Code. This Subcommittee was established on
March 4, 1999. The current Executive Compensation Subcommittee
members are Messrs. Bay and Kiewit.
The Executive Committee exercises, to the maximum extent
permitted by law, all powers of the Board between board
meetings, except those functions assigned to specific committees.
The current Executive Committee members are Messrs. Stinson
(Chairman), Bruce Grewcock, Colf, Kirkwood and Toll.
The Corporation does not have a nominating committee. The
Certificate provides that the incumbent directors may nominate a
slate of directors for election at the annual meeting of
stockholders. On March 26, 1999, the incumbent directors
nominated the slate listed on pages 3-4 of this Proxy Statement.
In 1998, the Board had four formal meetings and acted by
written consent in lieu of a meeting on six occasions. In 1998,
no director, except Mr. Crowe, attended less than 75% of the
aggregate of the total number of meetings of the Board and the
committees of which he was a member.
Directors who are employees of the Corporation or its
subsidiaries do not receive directors' fees. Non-employee
directors are paid annual directors' fees of $30,000, plus $1,500
for attending each meeting of the Board, $1,200 for attending
each meeting of a committee of the Board and $1,500 for attending
the Corporation's annual operations meeting.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below shows the annual compensation of the Named
Executive Officers. The Corporation does not currently have
plans under which options, stock appreciation rights, restricted
stock awards, long-term incentive compensation, profit sharing,
or pension benefits are held by the Named Executive Officers. As
a result of the Transaction, the Construction Business was
distributed to the Corporation. Although certain compensation
payments for the periods reflected below may have been made by
Level 3, all such payments related to the Construction Business.
Therefore, for presentation purposes, all payments are reported
as if they were made by the Corporation or its subsidiaries.
Annual Compensation
------------------------------------
Other Annual
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($)
- --------------------------- ---- ---------- --------- ----------------
Kenneth E. Stinson
Chief Executive Officer 1998 570,835 1,500,000 111,422(1)
1997 476,670 1,500,000
1996 402,500 900,000
George B. Toll, Jr.
Executive Vice President 1998 290,921 700,000
1997 257,706 650,000
1996 231,250 500,000
Allan K. Kirkwood
Executive Vice President 1998 254,885 400,000
1997 221,250 360,000
1996 192,350 310,000
Richard W. Colf
Executive Vice President 1998 261,530 250,000
1997 234,750 360,000
1996 215,875 310,000
Bruce E. Grewcock
Executive Vice President 1998 226,415 270,000
1997 199,831 175,000
1996 173,000 175,000
- ------------------------------
(1) Other Annual Compensation means perquisites and other
personal benefits received by each of the Named Executive
Officers, if, in the aggregate, in excess of the lesser of
$50,000 or 10% of their combined salary and bonus. In 1998,
taxable income in the amount of $40,778 was imputed to Mr.
Stinson with respect to the non-business use of corporate
aircraft and taxable income in the amount of $70,644 was imputed
with respect to his interest free loan described below. No other
Named Executive Officer received any Other Annual Compensation in
excess of the reporting threshold.
Director's Compensation
During 1998, each of the directors of the Corporation who
were not employed by the Corporation during 1998 received
directors fees consisting of an annual retainer of $30,000 (the
first quarterly installment of this amount was paid by Level 3
prior to the Transaction) and fees of $1,500 for attending each
Board meeting and $1,200 for attending each committee meeting.
Non-employee directors also receive $1,500 for attending the
Corporation's annual operations meeting.
Certain Relationships and Related Transactions
During 1998, Kiewit Engineering Co., a subsidiary of the
Corporation ("KEC"), and Bitterroot, Inc., a corporation
controlled by Mr. Scott ("Bitterroot"), were joint owners of an
aircraft. The cost of operation of such aircraft was
proportionally allocated between the Corporation and Bitterroot.
On January 25, 1999, KEC sold its interest in such aircraft to a
successor of Bitterroot for $10,800,000, the fair market value of
such aircraft interest. KEC acquired such aircraft interest in a
capital contribution from Level 3 in connection with the
Transaction.
The Corporation loaned George B. Toll, Jr. $800,000 during
1994 in connection with the purchase of a residence and
relocation expenses. The full principal amount of his demand note
payable to the Corporation is currently outstanding.
In connection with the Transaction, certain of Level 3's
outstanding convertible debentures were permitted to be converted
into Class C Stock. Level 3 provided the holders of such
convertible debentures with interest-free loans to repay the
outstanding loans used to finance the purchase of such
debentures. As a result of the Transaction, the shares of Class C
Stock were exchanged for shares of Common Stock, and the
interest-free loan obligations were transferred from Level 3 to
the Corporation. The following is a list of directors, executive
officers and nominees for election as director who had
outstanding interest-free loans to the Corporation in excess of
$60,000 during 1998, the largest aggregate amount outstanding
during 1998 and the amount, if any, currently outstanding: (a)
Kenneth E. Stinson - $1,280,000 ($1,080,000 currently); (b) Roy
L. Cline - $300,000 ($250,000 currently); (c) Bruce E. Grewcock -
$275,000 ($250,000 currently); (d) Allan K. Kirkwood - $240,000
($240,000 currently); (e) Richard W. Colf - $175,000 ($150,000
currently); (f) Kenneth M. Jantz - $200,000 ($150,000 currently);
(g) George B. Toll, Jr. - $125,000 ($0 currently); (h) Richard
Geary - $100,000 ($100,000 currently); (i) Tait P. Johnson -
$125,000 ($100,000 currently); (j) Stephen A. Sharpe - $100,000
($100,000 currently); and (k) John Brad Chapman - $105,000
($80,000 currently).
In 1998, Level 3 and a subsidiary of the Corporation entered
into a contract for the construction of Level 3's North American
Intercity Network. Construction, which is expected to be
completed during the first quarter of 2001, will cost an
estimated $2 billion. In 1998, Level 3 paid a subsidiary of the
Corporation approximately $87 million under this contract. In
addition, Level 3 has retained a subsidiary of the Corporation as
the general contractor for the construction of Level 3's campus
headquarters facility being built in Broomfield, Colorado. In
1998, Level 3 paid a subsidiary of the Corporation approximately
$22.7 million in connection with such activities.
In connection with the Transaction, the Corporation and
Level 3 entered into various agreements intended to implement the
Transaction, including a separation agreement ("Separation
Agreement") and a tax sharing agreement ("Tax Sharing
Agreement"), pursuant to which the parties agreed to allocate
certain liabilities associated with the Construction Business and
Level 3's other businesses and the costs and other liabilities
related to the Transaction.
The Separation Agreement provides that, except as otherwise
provided, the costs and expenses associated with the Transaction
are to be borne 82.5% by Level 3 and 17.5% by the Corporation. On
March 18, 1998, Level 3 and the Corporation entered into an
amendment to the Separation Agreement that provides that the
Corporation will bear substantially all of the Transaction
related costs and expenses if the Level 3 Board of Directors
determines to force conversion of all outstanding shares of Level
3's Class R Stock on or before July 15, 1998 (a "Forced
Conversion Determination"). The Level 3 Board of Directors made
such a Forced Conversion Determination and, accordingly,
substantially all of the Transaction related costs and expenses
will be borne by the Corporation.
The Tax Sharing Agreement provides that if the Transaction
were determined to be taxable other than as a result of a breach
of certain representations and warranties made by either Level 3
or the Corporation, such taxes and certain other taxes related to
the Transaction (together, the "Transaction Taxes") would be
allocated 82.5% to Level 3 and 17.5% to the Corporation. The Tax
Sharing Agreement provides that the Transaction Taxes will be
allocated 50% each to Level 3 and the Corporation if a Forced
Conversion Determination is made. As a result of the Forced
Conversion Determination, the Transaction Taxes will be so
allocated.
In connection with the Transaction, Level 3 and a subsidiary
of the Corporation entered into an amended mine management
agreement pursuant to which the Corporation's subsidiary provides
mine management and related services for Level 3's coal mining
properties. The amended mine management agreement provides the
Corporation's subsidiary with a right of offer in the event that
Level 3 were to determine to sell any or all of its coal mining
properties. During 1998, Level 3 paid a subsidiary of the
Corporation approximately $34 million in connection with services
provided pursuant to such agreement.
Bruce E. Grewcock is the son of William L. Grewcock.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Bay, Crowe,
William Grewcock, Kiewit and Scott. Messrs. Scott and William
Grewcock are employees of the Corporation. Messrs. Scott, William
Grewcock and Crowe were formerly officers of the Corporation or
its subsidiaries.
A corporation controlled by Mr. Scott was a joint owner of
an aircraft with KEC and such corporation's successor acquired
KEC's interest in such aircraft on January 25, 1999. In 1998,
Level 3 paid several subsidiaries of the Corporation
approximately $133 million in connection with the construction of
Level 3's North American Intercity Network and campus
headquarters facilities and for certain mine management services.
See "Certain Relationships and Related Transactions."
Mr. Stinson is a director of Valmont.
Executive Compensation Subcommittee Report
In 1998, prior to the Transaction, the Executive
Compensation Committee of the Level 3 Board of Directors (the
"Level 3 Committee") approved Mr. Stinson's annual base salary
for the 1998-1999 pay cycle. In addition, prior to the
Transaction, the Level 3 Committee also adopted the PKS Holdings,
Inc. Bonus Plan (the "1998 Bonus Plan"), and the Level 3
Committee established certain Performance Goals under the 1998
Bonus Plan for 1998. Payments under the 1998 Bonus Plan during
any plan year, if any, are made in the following year after
certification of the achievement of the specified Performance
Goals. The Level 3 Committee was composed entirely of "outside"
directors as defined in Section 162(m) of the Code.
Subsequent to the Transaction, the Executive Compensation
Subcommittee of the Compensation Committee of the Board became
responsible for reviewing and approving bonus payments pursuant
to the 1998 Bonus Plan, as well as for reviewing and approving,
on an annual basis, the compensation of the Named Executive
Officers pursuant to the Corporation's executive compensation
program. The Executive Compensation Subcommittee is composed
entirely of "outside" directors as defined in Section 162(m) of
the Code.
The objectives of the Corporation's executive compensation
program are to (a) support the achievement of desired Corporation
performance, (b) provide compensation that will attract and
retain superior talent, (c) reward performance, and (d) align the
executive officers' interest with the success of the Corporation
by placing a portion of total compensation at risk. The executive
compensation program has two elements: salaries and bonuses. The
program provides base salaries which are intended to be
competitive with salaries provided by other comparable companies.
Bonuses are the vehicle by which executive officers can earn
additional compensation depending on individual, business unit,
and Corporation performance.
The Executive Compensation Subcommittee has certified that
for 1998, the maximum Performance Goals under the 1998 Bonus Plan
have been met. The Executive Compensation Subcommittee uses its
discretion, subject to the Bonus Plan, to set executive
compensation at levels warranted in its judgment by external,
internal, or individual circumstances.
In recognition of Mr. Stinson's contributions to the
Corporation's performance in 1998, the Executive Compensation
Subcommittee has approved a bonus of $1,500,000, payable in 1999.
A number of factors were considered in setting Mr. Stinson's
bonus. These factors included meeting the 1998 Bonus Plan
Performance Goals, the Corporation's overall performance, the
increase in the stock formula price, as well as Mr. Stinson's
personal effort and accomplishments in managing the Corporation
and the Construction Business. After considering all of the
factors, the Executive Compensation Subcommittee felt the
approved bonus was well within a reasonable range.
The foregoing report has been furnished by the Executive
Compensation Subcommittee, Messrs. Bay and Kiewit.
Performance Graph
The following performance graph shall not be deemed to be
incorporated by reference by means of any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, except to the extent that the Corporation
specifically incorporates such information by reference, and
shall not otherwise be deemed filed under such acts.
The Corporation's Common Stock is not publicly traded. The
Corporation's Certificate contains a formula pursuant to which
the Common Stock is valued. As a result of the Transaction, the
Construction Business was distributed to the Corporation. Level
3's former Class C Stock was linked to the performance of the
Construction Business, and was valued pursuant to a formula
specified in Level 3's restated certificate of incorporation (the
"Level 3 Certificate"). Consequently, for presentation
purposes, the graph below compares the cumulative total return
(stock appreciation plus reinvested dividends) of Level 3's Class
C Stock for the four year period 1994-1997, and the Corporation's
Common Stock for 1998 (referred to in the graph collectively as
"Construction Stock"), with the Standard and Poors' Composite
500 Index and the Dow Jones Heavy Construction Index.
Pursuant to the Level 3 Certificate and the Certificate, for
all periods presented in the graph below, the Construction Stock
was valued at the formula value determined by the Level 3
Certificate or the Certificate, as the case may be, at the end of
its fiscal year, reduced by dividends declared during the
following year. For purposes of the graph, it has been assumed
that dividends were immediately reinvested in additional shares
of Construction Stock, although such reinvestment was not
permitted in actual practice. Although Level 3's and the
Corporation's fiscal years ended on the last Saturday in
December, the Construction Stock is compared against indexes
which assume a fiscal year ending December 31.
The graph assumes that the value of the investment was $100
on December 31, 1993, and that all dividends and other
distributions were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE
CONSTRUCTION STOCK, THE S&P 500 INDEX AND THE DOW JONES HEAVY
CONSTRUCTION INDEX
[INSERT GRAPH]
1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------
Construction Stock 100 118 153 195 248 310
S&P 500 Index 100 101 139 171 229 294
Dow Jones Heavy Construction Index 100 96 134 128 96 100
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below shows information about the ownership of
Common Stock as of April 22, 1999, by the Corporation's
directors, nominees for director, the Named Executive Officers
and each person who beneficially owns more than 5 percent of the
Common Stock. The table also shows the ownership of Common Stock
by all of the directors and executive officers as a group as of
such date.
Number of Shares
Name Beneficially Owned Percent of Shares
- --------------------- ---------------------------- -----------------
Kenneth E. Stinson 2,770,968 8.3%
Richard W. Colf 1,715,960 5.1%
George B. Toll, Jr. 1,711,236 5.1%
Richard Geary 1,435,560 4.3%
Allan K. Kirkwood 1,207,664 3.6%
Bruce E. Grewcock 881,336 2.6%
Tait P. Johnson 823,088 2.5%
Roy L. Cline 533,416 1.6%
Walter Scott, Jr. 400,000 1.2%
William L Grewcock 8,192 *
Mogens C. Bay --- ---
James Q. Crowe --- ---
Peter Kiewit, Jr. --- ---
Directors and Executive Officers
as a Group (19 Individuals)(1) 12,000,116 35.8%
- --------------------------------
* Less than 1%.
(1) Includes the 533,416 shares of Common Stock owned by Mr. Cline.
BONUS PLAN PROPOSAL
In 1998, the Level 3 Committee adopted the 1998 Bonus Plan.
The 1998 Bonus Plan was adopted to provide for the payment of
compensation to the Corporation's Named Executive Officers who were
no longer eligible to participate under Level 3's 1996 Bonus Plan
as a result of the Transaction. The 1998 Bonus Plan was adopted
pursuant to certain transition regulations under the Code, which
regulations generally limited the duration of the 1998 Bonus Plan
to bonuses payable for 1998. Consequently, the Corporation has
adopted, subject to Stockholder approval, the Peter Kiewit Sons',
Inc. 1999 Bonus Plan (the "1999 Bonus Plan").
The 1999 Bonus Plan will be administered by the Executive
Compensation Subcommittee of the Compensation Committee and is
intended to serve as a qualified performance-based compensation
program under Section 162(m) of the Code. Section 162(m) of the
Code denies a deduction by an employer for certain compensation in
excess of $1 million per year paid by a publicly held corporation
to its Named Executive Officers. Certain compensation, including
compensation based on performance goals, is excluded from this
deduction limit. Among the requirements for compensation to qualify
for this exception is that the material terms under which the
compensation is to be paid must be disclosed to and approved by the
Stockholders in a separate vote prior to the payment. Accordingly,
the 1999 Bonus Plan is being submitted to the Stockholders for
approval at the Annual Meeting.
The following description of the 1999 Bonus Plan is qualified
in its entirety by the terms of the 1999 Bonus Plan, a copy of
which is attached as Appendix I to this Proxy Statement.
----------
The eligible participants of the 1999 Bonus Plan are the Named
Executive Officers and any other executive officer selected by
the Executive Compensation Subcommittee to participate in the
Plan. There are currently 5 eligible participants. The 1999 Bonus
Plan provides for the payment of annual incentive bonus awards to
participants if, and only to the extent that, performance goals
established by the Executive Compensation Subcommittee are met.
Although the 1999 Bonus Plan is designed to mitigate the negative
impact of Section 162(m) on Stockholders, the Corporation may pay
discretionary bonuses to the Named Executive Officers based on non-
quantifiable performance goals which are also in the best interest
of Stockholders. Such bonuses will not be made pursuant to this
1999 Bonus Plan and accordingly will not be eligible for the
performance based exception to the $1 million limitation of Section
162(m).
The goals established by the Executive Compensation
Subcommittee can be expressed in terms of one or more pre-set
financial or other objective goals as they relate to an individual,
the Corporation as a whole, or to the business unit for which a
particular executive officer is responsible. Financial goals may be
expressed, for example, in terms of stock price, revenues, net
earnings, earnings per share, or return on equity. The goals can
include standards for minimum attainment, target attainment, and
maximum attainment. The goals established by the Executive
Compensation Subcommittee can be (but need not be) different each
year and different goals may be applicable to different
participants. The goals with respect to a particular plan year will
be established not later than the latest date permissible under
Section 162(m) of the Code. Any such goals shall (a) be determined
in accordance with the Corporation's audited financial statements
and generally accepted accounting principals and reported upon by
the Corporation's independent accountants, and (b) be based upon a
standard under which a third party with knowledge of the relevant
facts could determine whether the goal is met.
Subject to the approval of the 1999 Bonus Plan by the
Stockholders, for the 1999 plan year, the Executive Compensation
Subcommittee has established performance goals measured in terms of
net earnings, as reported in the Corporation's audited financial
statements. The performance goals provide that the maximum bonus
that could be paid for 1999 to any participant is 2.5% of the
Corporation's net earnings, which is also the maximum bonus that
could be paid to any participant during any plan year under the
1999 Bonus Plan. The Executive Compensation Subcommittee may, in
its discretion, reduce or eliminate the amount payable to any
participant in each case based upon such factors as the Executive
Compensation Subcommittee may deem relevant, but shall not increase
the amount payable to any participant. Before any awards are paid
to a Named Executive Officer, the Executive Compensation
Subcommittee must certify that the performance goals and other
material terms have been satisfied.
If approved by Stockholders, the 1999 Bonus Plan shall first
be effective with respect to the 1999 plan year. The 1999 Bonus
Plan has a five year term, ending with fiscal year 2003.
The Board can from time to time amend, suspend, or discontinue
the 1999 Bonus Plan (including amendments which could increase the
Corporation's cost); provided, however, that no amendment which
requires Stockholder approval in order for the 1999 Bonus Plan to
continue to comply with Section 162(m) of the Code will be
effective unless it receives the requisite Stockholder approval. In
addition, the Executive Compensation Subcommittee can make such
amendments as it deems necessary to comply with other applicable
laws, rules, and regulations.
Because performance goal criteria may vary from year to year
and from participant to participant, benefits under the 1999 Bonus
Plan are not presently determinable. Therefore, the Corporation has
omitted the tabular disclosure of the amount of benefits payable
under the 1999 Bonus Plan.
Approval of the Bonus Plan Proposal requires the affirmative
vote of the holders of a majority of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled
to vote thereon.
The Board unanimously recommends a vote FOR
the Bonus Plan Proposal.
QUALIFICATION AMENDMENT
The Board has approved, and recommends that the Stockholders
approve, the Qualification Amendment to become effective promptly
following its approval at the Annual Meeting. The text of the
Qualification Amendment is set forth as Appendix II hereto.
-----------
The Certificate permits only 3 members of the Board to be
"non-inside directors." All other directors must be either a
"current inside director" or a "former inside director." A
director may be a "current inside director" only if he meets
certain requirements, including, the requirement that he was
continuously employed by the Corporation, its predecessor, former
parent corporation or a subsidiary of the Corporation for at least
8 years before becoming a director. The Qualification Amendment
amends Article Fifth (A)(2)(c) of the Certificate by modifying
the definition of "current inside director" by reducing the
required years of employment from 8 years to 6 years. The purpose
of the Qualification Amendment is to provide the Board with
greater flexibility in identifying and nominating candidates to
serve as "inside directors" of the Corporation.
Approval of the Qualification Amendment requires the
affirmative vote of the holders of at least 66 2/3% of the issued
and outstanding shares of Common Stock.
The Board unanimously recommends a vote FOR
the Qualification Amendment.
STOCK OWNERSHIP AMENDMENT
The Board has approved, and recommends that the Stockholders
approve, the Stock Ownership Amendment to become effective
promptly following its approval at the Annual Meeting. The text
of the Stock Ownership Amendment is set forth as Appendix III hereto.
------------
The Certificate restricts the ownership of Common Stock to
employees of the Corporation and its subsidiaries and, with the
prior approval of the Board, by certain authorized transferees of
such employees (i.e., fiduciaries for the benefit of members of
the immediate families of employees, corporations wholly owned by
employees or employees and their spouses and/or children,
fiduciaries for the benefit of such corporations, charities, and
fiduciaries for charities designated by any such person). The
Certificate defines an "employee" to mean an employee of the
Corporation, any employee of a subsidiary of which the
Corporation owns at least a 20% equity interest (or any joint
venture in which the Corporation and/or any such subsidiary owns
at least a 20% equity interest) or an employee of Kiewit Coal
Properties, Inc. (now known as KCP, Inc.) or any subsidiary
thereof (or any joint venture in which Kiewit Coal Properties,
Inc. (now known as KCP, Inc.) or any such subsidiary has a 20% or
more equity interest). A director who is a former employee may
continue to own Common Stock, but is not permitted to acquire any
additional shares of Common Stock.
The Stock Ownership Amendment amends the definition of
"Employee" in Article Eighth of the Certificate to permit non-
employee directors to own shares of Common Stock. The purpose of
the Stock Ownership Amendment is to attract and retain qualified
non-employee directors. In the event of the approval of the Stock
Ownership Amendment, non-employee directors will be eligible to
purchase shares of Common Stock.
Approval of the Stock Ownership Amendment requires the
affirmative vote of the holders of at least 80% of the issued and
outstanding shares of Common Stock.
The Board unanimously recommends a vote FOR
the Stock Ownership Amendment.
NON-REDEEMABLE SERIES AMENDMENT
The Board has approved, and recommends that the Stockholders
approve, the Non-Redeemable Series Amendment to become effective
promptly following its approval at the Annual Meeting. The text
of the Non-Redeemable Series Amendment is set forth as Appendix IV hereto.
-----------
The Certificate designates ten (10) shares of Common Stock
as Common Stock, Non-Redeemable Series. The Common Stock, Non-
Redeemable Series has terms identical to the Common Stock, except
that holders of Common Stock, Non-Redeemable Series have no right
to cause the Corporation to repurchase their shares, are not
required to offer such shares for repurchase and are not subject
to any redemption by the Corporation. The Non-Redeemable Series
Amendment amends the Certificate by eliminating the Corporation's
Common Stock, Non-Redeemable Series. The designation of Common
Stock, Non-Redeemable Series was necessary under the Delaware
General Corporate Law ("DGCL") to ensure that the Corporation
have at least one class or series of stock with full voting
powers which was not subject to redemption. Recent revisions to
the DGCL have modified this requirement so that it can be
satisfied if at least one (1) share of stock with full voting
power is outstanding after any redemption by the Corporation. The
Certificate currently provides that no shares of any class of
stock shall be redeemed, either at the option of the holder thereof
or of the Corporation, unless after giving effect to such
redemption, there remain outstanding at least 1,000 shares of stock
of the Corporation having full voting power. The ten (10) shares
of Common Stock, Non-Redeemable Series originally issued by the
Corporation were repurchased by the Corporation on January 8,
1999. No shares of Common Stock, Non-Redeemable Series are
currently issued or outstanding. The Non-Redeemable Series
Amendment eliminates the unnecessary series of Common Stock, Non-
Redeemable Series.
Approval of the Non-Redeemable Series Amendment requires the
affirmative vote of the holders of at least 80% of the issued and
outstanding shares of Common Stock.
The Board unanimously recommends a vote FOR
the Non-Redeemable Series Amendment.
INTERESTS OF CERTAIN PERSONS
Qualification Amendment
The Qualification Amendment, if approved, would permit Mr.
Cline to serve as a director. Absent the approval of the
Qualification Amendment, Mr. Cline would not be eligible to serve
as a director.
Stock Ownership Amendment
The Stock Ownership Amendment, if approved, would permit
Messrs. Crowe, Kiewit and Bay to own Common Stock. Absent the
approval of the Stock Ownership Amendment, these directors would
not be permitted to own Common Stock.
OTHER MATTERS
It is not anticipated that any matters other than those
described in this Proxy Statement will be brought before the
Annual Meeting. If any other matters are presented, however, it
is the intention of the persons named in the proxy to vote the
proxy in accordance with the discretion of the persons named in
the proxy.
Accountants
PricewaterhouseCoopers, certified public accountants, have
been selected by the Board as the independent public accountants
for the Corporation. Representatives of PricewaterhouseCoopers
are expected to be present at the Annual Meeting and will have
the opportunity to make a statement and to respond to appropriate
questions.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors, executive officers and
persons who own more than 10% of the Common Stock to file reports
of ownership and changes in ownership with the United States
Securities and Exchange Commission ("SEC"). SEC Regulations
require the Corporation to identify anyone who filed a required
report late during the most recent fiscal year. Based solely upon
review of reports furnished to the Corporation and written
representations that no other reports were required during the
fiscal year ended December 26, 1998, all Section 16(a) filing
requirements were met.
Stockholder Proposals
Any proposal which a Stockholder intends to present at the
2000 Annual Meeting must be received by the Corporation on or
before December 25, 1999, to be included in the proxy material of
the Corporation relating to such meeting. In addition, if the
Stockholder wishes to nominate one or more persons for election
as a director, such Stockholder must comply with additional
provisions as set forth in the Corporation's By-Laws. Generally,
a Stockholder must give timely notice to the Secretary of the
Corporation. To be timely, such notice must be received by the
Corporation at its principal executive offices not less than
sixty days prior to the meeting. The By-Laws specify the
information which must accompany such Stockholder notice,
including the provision of certain information with respect to
the persons nominated for election as directors and any
information relating to the Stockholder that would be required to
be disclosed in a Proxy Filing. Details of the provision of the
By-Laws may be obtained by any Stockholder from the Secretary of
the Corporation. Any such proposals should be directed to the
Secretary, Peter Kiewit Sons', Inc., Kiewit Plaza, Omaha,
Nebraska 68131.
Annual Report
The Corporation is mailing to each Stockholder, along with
this Proxy Statement, a copy of its annual report. The
Corporation's annual report is its Form 10-K for the fiscal year
ending December 26, 1998, as filed with the SEC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE UPON THE WRITTEN
REQUEST OF A STOCKHOLDER A COPY OF THE CORPORATION'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES, AND EXHIBITS, FILED WITH THE SEC. WRITTEN REQUESTS
SHOULD BE ADDRESSED TO THE STOCK REGISTRAR AT KIEWIT PLAZA,
OMAHA, NEBRASKA 68131.
PETER KIEWIT SONS', INC.
April 23, 1999
Appendix I
PETER KIEWIT SONS', INC.
1999 BONUS PLAN
---------------
1. Purposes. The purposes of the Peter Kiewit Sons', Inc.
1999 Bonus Plan (the "Plan") are to attract and retain highly-
qualified executives by providing appropriate performance-based
short-term incentive awards and to serve as a qualified
performance-based compensation program under Section 162(m) of
the Code, in order to preserve the Company's tax deduction for
compensation paid under the Plan to Covered Employees.
2. Definitions. The following terms, as used herein, shall
have the following meanings:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Bonus" shall mean any annual incentive bonus award
granted pursuant to the Plan, the payment of which shall be
contingent upon the attainment of Performance Goals with respect
to a Plan Year.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(d) "Committee" shall mean the Compensation Committee of
the Board, any subcommittee thereof or any successor thereto
designated by the Board to administer the Plan, the members of
which satisfy the requirements specified in Section 5 hereof.
(e) "Company" shall mean Peter Kiewit Sons', Inc., a
Delaware corporation, or any successor corporation.
(f) "Covered Employee" shall have the meaning set forth
in Section 162(m)(3) of the Code (or any successor provision).
(g) "Executive Officers" shall mean an officer of the
Company who, as of the beginning of a Plan Year, is an
"executive officer" within the meaning of Rule 3b-7 promulgated
under the Securities Exchange Act of 1934, as amended.
(h) "Participant" shall mean the Covered Employees and
any other Executive Officer selected by the Committee to
participate in the Plan.
(i) "Performance Goals" shall mean the criteria and
objectives which must be met during the Plan Year as a condition
of the Participant's receipt of payment with respect to a Bonus,
as described in Section 3 hereof.
(j) "Plan" shall mean the Peter Kiewit Sons', Inc. 1999
Bonus Plan, as set forth herein and as amended from time to time.
(k) "Plan Year" shall mean the Company's fiscal year.
3. Performance Goals. Performance goals for each Plan Year
shall be established by the Committee in writing not later than
the latest date permissible under Section 162(m) of the Code.
Such Performance Goals may be expressed in terms of one or more
financial or other objective goals. Financial goals may be
expressed, for example, in terms of stock price, revenues,
earnings per share, or return on equity. To the extent
applicable, any such Performance Goal shall be determined (i) in
accordance with the Company's audited financial statements and
generally accepted accounting principles and reported upon by the
Company's independent accountants and (ii) so that a third party
having knowledge of the relevant facts could determine whether
such Performance Goal is met. Performance Goals for each Plan
Year shall include a threshold level of performance below which
no Bonus payment shall be made, levels of performance at which
specified percentages of the target Bonus shall be paid, and a
maximum level of performance above which no additional Bonus
shall be paid. The Performance Goals established by the Committee
may be (but need not be) different for each Plan Year and
different Performance Goals may be applicable to different
Participants.
4. Bonuses.
(a) In General. For each Plan Year commencing with the Plan
Year ending December 1999, the Committee shall, no later than the
time specified in Section 3 hereof, specify the Participants for
such Plan Year, the Performance Goals applicable to such Plan
Year and the maximum Bonus payable to Participants upon the
attainment of the applicable Performance Goals. The Committee
may, in its discretion, reduce or eliminate the amount payable to
any Participant (including a Covered Employee), in each case
based upon such factors as the Committee may deem relevant, but
shall not increase the amount payable to any Covered Employee.
Unless otherwise provided by the Committee in its discretion in
connection with the termination of employment of any Participant,
payment of a Bonus for a particular Plan Year shall be made only
if and to the extent the Performance Goals with respect to such
Plan Year are attained and only if the Participant is employed by
the Company or one of its Subsidiaries on the last day of such
Plan Year.
(b) Time of Payment. Unless otherwise determined by the
Committee, all payments in respect of Bonuses granted under this
Section 4 shall be made no later than a reasonable period after
the end of the Plan Year. In the case of Participants who are
Covered Employees, unless otherwise determined by the Committee
in connection with the termination of employment of any
Participant, such payments shall be made only after achievement
of the Performance Goals has been certified in writing by the
Committee.
(c) Form of Payment. Payment of such Participant's Bonus
for any Plan Year shall be made in cash.
(d) Deferral Elections. The Company may give each
Participant the right, in accordance with rules and regulations
to be established by the Committee, to elect to defer the receipt
of any or all of such Participant's Bonus under the Plan in
respect of any Plan Year.
(e) Maximum Bonus. The maximum Bonus payable to any
Participant during any Plan Year pursuant to the Plan is 2.5% of
the net earnings of Company and its Consolidated Subsidiaries, as
shown in its Form 10-K (Consolidated Statement of Earnings) for
the relevant year.
5. Administration. The Plan shall be administered by the
Committee. The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise
all the powers either specifically granted to it under the Plan
or necessary or advisable in the administration of the Plan,
including, without limitation, the power to grant Bonuses; to
determine the persons to whom and the time or times at which
Bonuses shall be granted; to determine the terms, conditions,
restrictions and performance criteria relating to any Bonus; to
make adjustments in the Performance Goals in response to changes
in applicable laws, regulations, or accounting principles to the
extent not inconsistent with Section 162(m) of the Code and the
regulations thereunder; except as otherwise provided in Section
4(a) hereof, to adjust compensation payable upon attainment of
Performance Goals; to construe and interpret the Plan and any
Bonus; to prescribe, amend and rescind rules and regulations
relating to the Plan, including but not limited to rules and
regulations referred to in Sections 4(c) and 4(d) hereof; and to
make all other determinations deemed necessary or advisable for
the administration of the Plan.
The Committee shall consist of two or more persons each of
whom is an "outside director" within the meaning of Section
162(m) of the Code. The Committee may appoint a chairperson and a
secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable, and shall keep
minutes of its meetings. All determinations of the Committee
shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or
by unanimous written consent. The Committee may delegate to one
or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee
or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any
responsibility the Committee, or such person may have under the
Plan. All decisions, determinations and interpretations of the
Committee shall be final and binding on all persons, including
the Company, the Participant (or any person claiming any rights
under the Plan from or through any Participant) and any
shareholder.
No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith with respect
to the Plan or any Bonus granted hereunder.
6. General Provisions.
(a) Compliance With Legal Requirements. The Plan and the
granting of Bonuses, and the other obligations of the Company
under the Plan shall be subject to all applicable federal and
state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required.
(b) No Right To Continued Employment. Nothing in the Plan
or in any Bonus granted shall confer upon any Participant the
right to continue in the employ of the Company or any of its
Subsidiaries or to be entitled to any remuneration or benefits
not set forth in the Plan or to interfere with or limit in any
way the right of the Company to terminate such Participant's
employment.
(c) Withholding Taxes. The Company or subsidiary employing
any Participant shall deduct from all payments and distributions
under the Plan any taxes required to be withheld by federal,
state or local governments.
(d) Amendment and Termination of the Plan. The Board may at
any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided, however that no
amendment which requires shareholder approval in order for the
Plan to continue to comply with Section 162(m) of the Code shall
be effective unless the same shall be approved by the requisite
vote of the shareholders of the Company. Additionally, the
Committee may make such amendments as it deems necessary to
comply with other applicable laws, rules and regulations.
Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Participant, without such
Participant's consent, under any Bonus previously granted under
the Plan.
(e) Participant Rights. No Participant shall have any claim
to be granted any Bonus under the Plan, and there is no
obligation for uniformity of treatment among Participants.
(f) Unfunded Status of Bonuses. The Plan is intended to
constitute an "unfunded" plan for incentive compensation. With
respect to any payments which at any time are not yet made to a
Participant pursuant to a Bonus, nothing contained in the Plan or
any Bonus award shall give any such Participant any rights that
are greater than those of a general creditor of the Company.
(g) Governing Law. The Plan and the rights of all persons
claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving
effect to the choice of law principles thereof.
(h) Effective Date. The Plan shall first be effective with
respect to the 1999 Plan Year, but only if the Plan shall have
been approved at the 1999 annual meeting of shareholders by the
requisite vote approval of the shareholders of the Company.
(i) Interpretation. The Plan is designed and intended to
comply with Section 162(m) of the Code, to the extent applicable,
and all provisions hereof shall be construed in a manner to so
comply.
(j) Term. No Bonus may be granted under the Plan with
respect to any Plan Year after Plan Year 2003. Bonuses made with
respect to Plan Year 2003 or prior years, however, may extend
beyond Plan Year 2003 and the provisions of the Plan shall
continue to apply thereto.
Appendix II
ARTICLE FIFTH
-------------
DIRECTORS AND OFFICERS
----------------------
(A)
(2) Qualifications of Directors.
(c) A "current inside director" is a director who
(i) is a current Common stockholder of the Corporation; (ii) is
currently an officer of either (A) the Corporation or (B) a
Subsidiary which is engaged primarily in the construction, mining
or materials businesses; and (iii) was continuously employed by the
Corporation, its predecessor, former parent corporation or such a
Subsidiary for at least eight (8) six (6) years before becoming a
director.
Appendix III
ARTICLE EIGHTH
--------------
DEFINITIONS
-----------
"Employee" means an individual employed by (i) the
Corporation, any Subsidiary or Twenty Percent Subsidiary or any
joint venture in which the Corporation and/or any Subsidiary or
Twenty Percent Subsidiary has a twenty percent or more interest
or (ii) Kiewit Coal Properties, Inc. or any subsidiary thereof or
any joint venture in which Kiewit Coal Properties, Inc. or any
such subsidiary has a twenty percent or more interest. An
Employee shall also include any person serving on the Board of
Directors of the Corporation. or of any Subsidiary; provided,
however, that such person shall have previously owned stock of
the former parent corporation of the Corporation or the
Corporation as an employee; and, provided further, that such
person shall not be eligible to purchase additional stock of the
Corporation.
Appendix IV
ARTICLE FOURTH
--------------
CAPITAL STOCK
-------------
III.
VOTING RIGHTS AND CHANGES IN CAPITAL STRUCTURE
----------------------------------------------
(C) Non-Redeemable Series. Ten shares of the Common Stock
are hereby designated as Common Stock, Non-Redeemable Series. The
rights, powers, preferences, privileges and limitations of Common
Stock, Non-Redeemable Series shall be identical to those of all
other shares of Common Stock, except as described in ARTICLE SIXTH
hereof.
ARTICLE SIXTH
-------------
POWERS OF THE CORPORATION AND OF THE
------------------------------------
DIRECTORS AND STOCKHOLDERS
--------------------------
(D) Stock Ownership and Transfer Restrictions. The following
restrictions on the ownership and transfer of the Common Stock of
the Corporation are hereby imposed:
(9) Non-Redeemable Series. Notwithstanding any other
provision hereof with respect to the Common Stock, in no event
shall (i) any holder of Common Stock, Non-Redeemable Series have
any right to require the Corporation to repurchase such holder's
shares of Common Stock, Non-Redeemable Series or be required to
offer such shares to the Corporation for repurchase; or (ii)
Common Stock, Non-Redeemable Series be subject to any redemption.
PETER KIEWIT SONS', INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS, JUNE 19, 1999
PROXY
The undersigned hereby appoints Douglas A. Obermier and Gregory
M. Broz, or either of them or their substitutes, as proxies, each
with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the
shares of Common Stock of Peter Kiewit Sons', Inc. held of record
by the undersigned at the close of business on April 22, 1999, at
the Annual Meeting of Stockholders to be held June 19, 1999, or
any adjournment or postponement thereof. In their discretion, the
proxies are authorized to vote upon such other business as may
properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, this Proxy will be voted FOR proposals 1, 2, 3, 4 and 5.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
Proposal 1: Approval of the 1999 Bonus Plan
To Approve the 1999 Bonus Plan
--- FOR --- AGAINST --- ABSTAIN
Proposal 2: Approval of the Qualification Amendment
To Approve the Qualification Amendment
--- FOR --- AGAINST ---ABSTAIN
Proposal 3: Approval of the Stock Ownership Amendment
To Approve the Stock Ownership Amendment
--- FOR --- AGAINST ---ABSTAIN
Proposal 4: Approval of the Non-Redeemable Series Amendment
To Approve the Non-Redeemable Series Amendment
--- FOR --- AGAINST ---ABSTAIN
Proposal 5: Election of Directors
To elect the thirteen nominees specified as follows as Directors:
Mogens C. Bay Bruce E. Grewcock Walter Scott, Jr.
Roy L. Cline William L. Grewcock Kenneth E. Stinson
Richard W. Colf Tait P. Johnson George B. Toll, Jr.
James Q. Crowe Peter Kiewit, Jr.
Richard Geary Allan K. Kirkwood
---- FOR ---- WITHHOLD
all nominees authority to vote
listed (except) for all nominees
as otherwise
specified below)
Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) of the nominee(s) on the lines
below.
--------------------------------------
--------------------------------------
Please sign exactly as name appears below.
[Name of Shareholder]
- --------------------- -----------------------------------------
Date Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
